Coffee labeling lawsuit settled, questions linger

A $5 million class-action federal lawsuit accusing national supermarket chain Safeway of profiting off the reputation of Kona coffee while selling a product containing little Hawaii-grown coffee has been settled after nearly two years of litigation.

The Kona Coffee Farmers Association said its members are disappointed about the recent settlement because it leaves important legal issues raised by the complaint unresolved. For example, they want to know if use of the Kona name on packages of coffee containing little, if any, coffee actually grown in the region violates federal and state consumer protection and fair marketing laws.

“Kona coffee growers had hoped that a court decision on the legal issues in the Safeway case would encourage the Hawaii Legislature and the Hawaii Attorney General to begin providing the types of protections that, for example, California provides to Napa Valley wine, Idaho to Idaho potatoes, and Georgia to Vidalia onions,” said Cecelia Smith, Kona Coffee Farmers Association president. “We are disappointed that there was no court decision on the issues presented by this case.”

Messages left for Keith Turner, Safeway Public Affairs and Government Relations Director, were not returned Monday or by press time Tuesday.

California resident and coffee drinker Chanee Thurston filed a class action complaint in August 2011 stating she and other consumers had been misled by the labeling of “Safeway Select Kona Blend Coffee” packages. She bought the coffee believing it was comprised largely or entirely of high quality coffee beans from the Kona region of Hawaii and relied on these representations when making her purchases. Thurston said she paid more money for the Kona blend than she would have for other similar coffee products made up of a large amount of non-Kona beans. She sought recovery of more than $5 million for consumers who purchased “Safeway Select Kona Blend Coffee” after Aug. 20, 2007.

Safeway claimed the used of the words “Kona Blend” did not indicate that the majority of beans in the package were grown in Kona and that those words fairly alerted consumers that the packages contained a mix of other different types of unidentified coffees in addition to Kona beans. Safeway also contended the relief sought by Thurston should be limited because Safeway in 2012 increased the Kona coffee in the blend to a minimum of 10 percent, as well as changed the labels to reflect that minimum and disclosed that up to 90 percent of the contents was Latin American-grown coffee.

Bruce Corker, Kona Coffee Farmers Association’s legislative committee chairman and a board member, said the change was in response to the association’s actions, which had called for a boycott of Safeway’s 1,700 stores nationwide after a farmer saw the Kona blend for sale in California. The association thought the labels were misleading and degraded the reputation of Hawaii’s world-famous coffee.

Both parties recently reached a resolution of the case, which had a summary judgment hearing scheduled for June 7. The lawyers for both parties filed an agreed stipulation for dismissal of the case on March 21.

The papers in the court file do not disclose the terms — monetary or otherwise — agreed to by Safeway and Thurston in connection with the settlement. The dismissal prevents the court from proceeding to decide important legal issues raised by Thurston and leaves other consumers who purchased the coffee with no recovery for damages, according to the Kona Coffee Farmers Association.

While the result of the lawsuit was not exactly what the Kona Coffee Farmers Association hoped for, Bruce Corker said the whole ordeal brought even more awareness and education about unfair labeling laws and the truth about coffee blends. He explained how coffee blends are confusing to consumers who often don’t know what they’re buying and mistakenly believe they’re getting a blend of several Kona-grown coffees.

He also mentioned how huge profits are going to “unscrupulous marketers and blenders,” as well as ultimately ending up out-of-state — negatively affecting Kona coffee farmers’ livelihoods and the local economy.

Corker pointed to the findings of a 2010 study, “Economic Effects of Blending Kona Coffee — A Preliminary Analysis,” by San Francisco-based resource economist Marvin Feldman. The study found blenders gain extra profit of $14.4 million annually from the use of the Kona name on 10 percent blends and the negative economic effect on the approximately 700 Kona coffee farms might well exceed $14.4 million annually. The study indicates the economic loss for the average Kona coffee farm may exceed $20,000 per year.

Corker hopes the lawsuit serves as a lesson to other marketers who are using the same sort of deceptive labeling. He said the Kona Coffee Farmers Association will continue to fight for stricter, fairer labeling requirements for not just Kona coffee, but all products that use the “Hawaii” name on labels.